Three challenges awaiting Coca-Cola’s new CEO

With operating chief James Quincey set to takeover as CEO from May 2017, here are three areas he’ll need to improve.

coke-story

Coca-Cola is recruiting from within for its new CEO, who will replace Muhtar Kent when he steps down in May. Coca-Cola veteran James Quincey, who is currently chief operating officer, will take on the top job.

Despite Quincey’s extensive experience, he faces a number of challenges at one of the world’s biggest brands. It has seen global sales slide, with revenues falling from $48bn in 2012 to $44.3bn last year.

Battling sugar

One of Quincey’s biggest challenges will be battling Coke’s ongoing sugar demons.

He is credited with helping the company cut its dependency on full-sugar drinks, having spearheaded launches such as Coca-Cola Life. However, Life still only represents 2.43% of the total Coke portfolio, while it is too early to assess the true impact of the Coke Zero Sugar launch earlier this year.

Coca-Cola Life can’t be the last chapter in terms of brand innovation in cola carbonates.

Howard Telford, Euromonitor

What is clear is that sales of ‘classic’ Coca-Cola are on the slide, with total UK value sales down 7.8% to £267.5m for the six months ending 2 July 2016. In fact, for the same period, Diet Coke, Coke Zero and Coke Life also saw sales fall by 5.4%, 3.4% and 54.5% respectively.

While it is good – not to mention, necessary – Coke is committed to lowering calories and sugar levels, it doesn’t yet have a compelling enough non-sugar, sub-brand to shake off the ‘junk food’ tag. Meanwhile, some of its most important marketing – such as the red ‘Holidays are Coming’ Christmas truck – remains synonymous with Coke’s red full-sugar variant.

READ MORE: Coca-Cola – ‘We are not the cause of the obesity crisis, we are a solution’

“Coca-Cola Life can’t be the last chapter in terms of brand innovation in cola carbonates,” urges Howard Telford, senior beverages analyst at Euromonitor International.

“As sweetener options are improved, the company must experiment with new lower calorie or ‘natural’ variations on its classic cola formulation that meet the needs of consumers.”

With the anti-sugar brigade growing stronger daily, Quincey will need to make Coke’s low sugar brands more compelling or think up something entirely new. He will need to put “strong support” from Coke’s core bottling partners to creative use, and fast.

Digital woes

By Coke’s own admission, TV remains its primary advertising channel. However, with mobile consumption growing drastically, this approach must evolve.

Despite having 300 apps worldwide, “most of these apps, they have less than 50,000 users or 100,000 users. That is nothing,” Coke’s global CMO Marcos de Quinto said, according to AdAge.

To address this, Coke is investing heavily in digital, with David Godsman, a former Bank of America executive, joining earlier this month in the newly created role of chief digital marketing officer.

Quincey, who de Quinto describes as having a “good sense of marketing”, will have to prioritise digital even if its impact on ROI isn’t immediately obvious. This will make Coke resonate more with millienials, while ‘smarter’ investments in digital could make its apps finally shine.

Win back buzz

Coca-Cola van
Coke needs its marketing to help win back buzz

Over the last 12 months, Coke’s buzz score, which is a balance of the positive and negative things consumers have said about a brand, has risen at a statistically significant rate of 4.6 percentage points to a score of -2.1, according to YouGov BrandIndex.

However, this still puts it 23rd in of a list of 24 of the UK’s biggest carbonated soft drink brands. And although Coke’s ad awareness score has it top of the 24-brand table – unsurprising, given its superior budget – this score has fallen at a statistically significant rate of 2.3 points to 19.8, giving hope to rivals such as Pepsi and Redbull.

While Coca-Cola is currently rolling out its One Brand strategy worldwide, it’s fair to say this strategy has (so far) failed to produce any iconic advertising. And for buzz to return, the business needs another ‘Share A Coke’ level campaign and for marketing to once again present a compelling reason for people to buy.

Focusing on non-sugar options, wouldn’t hurt buzz either, according to Telford. He concludes: “Emphasising the consistency of flavour profiles, so establishing that Zero, Life and future diet options are nevertheless “the real thing”, will be an important part of developing the cola carbonates category.”

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